Energy markets are lower across the board this morning but there does not seem to be a lot of strength in that direction thus far.
So far it is a continuation of yesterday when oil prices put in a mixed trading session after a plethora of fundamental data was released as well as several comments on the upcoming OPEC meeting. Tuesday WTI was able to end the pre-inventory trading report cycle with a small gain with Brent and refined product contracts trading lower throughout most of the session. The main pricing feature in the oil pits was a modest narrowing of the Brent/WTI spread (almost 8 percent). The spread has been blowing out and seemingly topped late last week. That said the spread remain very wide providing a strong economic incentive to export US crude oil grades.
The driver today was comments and news snippets suggesting that Saudi Arabia and Russia are still pushing for a supply increase at the June 22 meeting. A change in the production cutting agreement would be more bearish for Brent as it will result in additional international crude flowing into the market. On the financial front global equity markets were mixed after a successful first summit between the US and North Korean Presidents. The EMI Index was marginally higher.
The EMI Index was higher by 0.01 percent on the day with the year to date loss at 1.1 percent. Seven of the ten bourses in the Index are still in positive territory for 2018 with China still holding the worst performing spot in the Index with Hong Kong in the top spot with a 4 percent gain for the year. The slightly positive value direction in global equity markets was a neutral price driver for the oil complex.
On the currency front the US dollar Index is higher on the day with the Yen/USD and the Euro/USD lower. Overall the currency markets were a negative price driver for the oil complex.